Nike enters Web3, can it make money while standing?

Original Title: “Nike's Money in Web3, Is It Going to Earn Standing Up?”

Author: Laipeng, Metaverse Daily Explosion

After three and a half months of preparation, Nike's Web3 platform .SWOOSH finally has new developments. On January 26, it launched a four-day AIR FORCE 1 virtual creation review competition. Surprisingly, this event is unrelated to the NFTs that the crypto community anticipated; it is purely designed to tell a good story.

Participants are required to showcase their footwear design concepts in a visual storyboard format on Instagram. Four winners will each receive a $5,000 reward and will be invited to collaborate with Nike designers to create digital sneakers, sharing the sales royalties.

It is noteworthy that the launch of the .SWOOSH event was hasty and low-key, with the official announcement coming just as the event started, yet Nike's official Twitter did not mention it at all. It is important to know that .SWOOSH has always been a strong signal of Nike's active layout in Web3, and Nike has already released several sneaker NFT series. However, this time, the well-known sportswear brand's Web3 initiative did not reach out to the recovering NFT market at the beginning of 2023, but instead sought creativity through traditional video formats.

Entering Web3 with NFTs, Nike earned over $185 million in revenue, with significant contributions from the crypto community. However, this year, it intends to change its approach, shifting its focus away from just the NFT consumer group.

Virtual Creation Competition Unrelated to NFTs

Nike's .Swoosh is hosting a creation review competition called YourForce1, which requires participants to center their creations around the Air Force 1 sneaker, showcasing their understanding of the shoe through personal stories and design concepts. Contrary to the crypto community's expectations, this event is unrelated to NFT distribution; the final submissions must be presented on Instagram in a visual storytelling format.

The Air Force 1, or AF1, is a sneaker that was born in 1982, originally endorsed by six basketball players at the time. After 2007, the endorsers gradually changed to NBA stars like Kobe, LeBron, and Carter. This virtual creation competition by Nike targets a long-established user base, typically "die-hard" fans who have experiences in buying, wearing, and socializing around shoes, rather than consumers of sneaker NFT series.

Swoosh hosts the YourForce1 creation review competition

As early as January 19, .Swoosh officially announced the establishment of a virtual co-creation home, .SWOOSH Studio, hinting at upcoming related activities, although details were not disclosed. Once the YourForce1 event launched, eager participants from the crypto community were taken aback by the limited prize slots and numerous restrictions.

First, regarding the prize setup, each winning participant can receive a $5,000 reward, but there are only four slots available; secondly, the competition is only open to users from the United States, the United Kingdom, Denmark, Germany, France, Italy, the Netherlands, Norway, Spain, and Sweden, with each person limited to submitting one entry.

The "one entry only" submission must include an Instagram post containing eight original images to form a visual mood board (usually referring to a series of images, text, and sample collages); to successfully submit, participants must follow the specified format for the title, such as the entry identifier "neon95.swoosh," concept name, brief description, and sequentially labeled slides, etc.; participants must strictly adhere to the event timeline (from January 25 at noon UTC to January 29 at 9 AM), as late submissions will not be accepted. Of course, all photos, videos, sounds, and artworks submitted by users must be original and must not have appeared on any other footwear or shoe components.

The .Swoosh event demonstrates a "high standard" attitude, but comments and replies on the official Blog and Instagram show that followers did not exhibit high enthusiasm for this event and even seemed somewhat skeptical.

On Instagram, after .Swoosh released the event news, there were only 279 comments; aside from inquiries about how to participate, many users complained about being unable to join due to regional restrictions. Some users questioned why .Swoosh did not open participation to global users and limited it to community members of the platform, while others directly accused the event of being "bait" to "freeload" free works from participants. Interestingly, some players from the crypto community expressed dissatisfaction with the lack of NFT distribution.

Nike's "Patience" in Web3

As the competition has just concluded and results are yet to be announced, it remains unknown what kind of creative works will be favored by Nike. Judging by the event's impact, .Swoosh's activities have not generated much buzz, and there are even many negative reviews; even with the "Nike" brand halo, it has not shown the same excitement as previous NFT launches.

The organizer of the creation competition, .Swoosh, was positioned from the start as Nike's virtual creative headquarters, aiming to build a platform for users to purchase, showcase, and trade virtual assets, with a roadmap that will gradually unlock user access to activities and products. Therefore, the outside world views .Swoosh as Nike's Web3 UGC e-commerce platform, which may likely integrate co-creation, sales, and even NFT trading in the future.

Interestingly, for this creator activity, Nike's official channels did not promote it at all, with the most recent tweet dating back to last November. It seems that Nike's official stance on the debut of this Web3 platform has not been heavily invested in; however, the Air Force 1 series has been prominently displayed on the official store, unfortunately without joint marketing with the .SWOOSH event.

AF1 sneakers recently pushed to the front of the e-commerce page

As a well-known sports brand, Nike has shown signs of fatigue in the competitive sportswear market against both new and old brands. The financial report for the entire year of 2022 shows that Nike's sales revenue in Greater China has declined for three consecutive quarters. Additionally, the stock price has been on a downward trend since November 2021, dropping from $118 to around $82 in October 2022.

Entering a new decade, this long-established sports brand is beginning to explore new paths in the digital world and the crypto Web3 field. In 2020, Nike began testing RFID related to blockchain technology to track supply chain processes. At the end of 2021, Nike acquired the metaverse fashion company RTFKT, which gained fame for designing an NFT shoe for Tesla CEO Elon Musk. Nike quickly collaborated with RTFKT to launch NFT sneakers. Last November, Nike launched the Web3 virtual co-creation platform .SWOOSH, and recently, the platform applied for three trademarks related to the crypto industry.

From the actions of the past two years, Nike has frequently shown goodwill towards crypto asset users in Web3 and has reaped considerable rewards. According to user @kingjames23 on the data-sharing platform Dune, Nike's NFT-related projects have generated over $185 million in revenue since their launch, making Nike the traditional brand with the highest NFT revenue. Notably, the first Nike sneaker NFT series released by RTFKT and Nike CryptoKicks saw trading volume exceed $20 million within 24 hours of being listed on the trading platform OpenSea.

The capital-absorbing effect of the crypto industry is evident, and Nike certainly will not miss out easily. However, this time, the .SWOOSH event did not lean towards the crypto circle at all, which genuinely surprised the user base in the crypto world, with enthusiasts directly commenting on the official Twitter, asking for an explanation for the creative designers in the crypto world.

Unlike other "crypto-involved" Web3 projects that hurriedly launched to "harvest" consumers, Nike's exploration of Web3 has become more patient, not designating .SWOOSH solely as an NFT platform, but instead marking it with a creative competition.

Why has Nike's Web3 pilot no longer aimed solely to please crypto users? The official press release provides part of the answer: "At .SWOOSH, we want to expand the definition of creators, which is why this .SWOOSH Studio competition places storytelling creatively above creative skills."

In its Web3 layout, Nike is showcasing a different strategy; selling NFTs may no longer be the only focus, and "co-creating with users" instead reveals strategic intent. In 2023, traditional brands' understanding of Web3 is set to change.